The Hindu Business Line : LIC's New Anmol Jeevan

ON November 1, LIC launched New Anmol Jeevan, to replace its popular pure term assurance product, Anmol Jeevan. Let us examine the features of the new policy.

Policy details

Pure term schemes are the most basic of all insurance plans. Such plans aim to provide only life cover to the insuree and do not incorporate a savings element, as is the case with endowment and money-back plans. The insuree can get a high amount of life cover for a relatively lower premium payout.

Unlike savings-oriented plans that offer survival benefits, pure term plans do not involve any payout at maturity. If the policyholder dies during the plan term, the sum assured is paid out immediately and the plan terminates.

Under the new plan, the maximum policy term has been enhanced from 20 years to 25 years. At the same time, while Anmol Jeevan offered all modes of premium payment (monthly, quarterly, semi-annually, annually as also single premium), the new plan offers only the last three modes.

Paid-up, surrender value and loans

As this is a pure term plan providing only life cover, the policy does not become paid-up nor does it acquire a surrender value. By extension, no loans are available against this plan.

Rebates

Under the new plan, no rebate for the sum assured is extended if the insuree opts for the regular premium payment scheme. Those who opt for the single premium option are entitled to a rebate if the sum assured is Rs 25 lakh or above (at Re 1 per Rs 1,000 sum assured). If one chooses the annual premium payment option, a rebate of 1 per cent of annual premium is extended; this rebate is not applicable if one chooses the half-yearly premium payment option.

Grace period

LIC provides a grace period of 15 days to make premium payments. Non-payment within this period will result in the policy lapsing. If death takes place during the grace period, the policy is deemed to be valid and LIC will pay out the sum assured after deducting the unpaid premium.

Renewing a lapsed policy

Policies that have lapsed can be renewed before the plan's duration ends. However, this will be at the discretion of LIC. Medical costs required to be undertaken to prove one's insurability will have to be borne by the policyholder.

Suitability

Term plans are for those seeking to financially protect their dependents at a low cost. LIC's term plans stack up favourably as the premiums are competitive.

(Pieces under this column seek to examine insurance products in detail. Readers are requested to compare products featured under this column with similar products offered by other players before arriving at an investment decision.)

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